Sino Agro Foods shareholders seeking to have a temporary receiver appointed are dismissing the prospect of a Tanzanian "white knight" investor rescuing the firm from its troubled financial state.
Heng Ren Investments and Norwegian investor Arne H. Fredly are the plaintiffs in the hearing in New York federal district court, with the defendants listed as Sino Agro Food CEO Solomon Yip Kun Lee and Sino Agro Foods, with an address in Guangzhou.
A filing made in late January by the plaintiffs’ law firm states that a recovery plan offered earlier to the court by Solomon Lee centers on a potential Tanzanian “white knight” investor, a Ms. Rashid. A declaration provided to court by the defendant said Rashid had agreed to subscribe to illiquid Sino Agro shares for an amount up to USD 20 million (EUR 17.4 million), and to loan an additional USD 10 million (EUR 8.7 million) to the company. In her declaration, Rashid suggested she wouldn’t invest if a receiver is appointed to oversee the company, which is incorporated in the U.S. state of Nevada.
But the USD 30 million (EUR 26.1 million) is dependent on approvals from Tanzanian authorities to expatriate the funds, plaintiffs said in objecting to the proposal.
“In reality, however, the investment will be neither possible nor legal,” the group said.
Harming Rashid’s case is her proposal to buy Sino Agro shares on the U.S. OTCQX (over-the-counter) market, despite the fact Sino Agro was downgraded to OTC Pink Sheet Market, the plaintiffs’ statement said.
The plaintiffs’ filing to the court also includes a long list of allegations alleging corporate mismanagement and lack of public disclosure, specifically in regard to the company’s shrimp “megafarm,” which Sino Agro hoped would make it a leading shrimp producer in China.
The plaintiffs’ statement said Solomon Lee made promises to shore up Sino Agro’s cashflow through trading in agricultural commodities – in particular a soybean contract worth more than USD 1 billion (EUR 870 million).
“None of these stalling promises have come close to being realized,” according to the plaintiffs’ declaration.
Rather than take on more debt, the plaintiffs in their filing, “the better course is for the receiver to seek more-sophisticated equity investment after implementing some governance and marshalling assets."
SeafoodSource’s attempt to contact Solomon Lee for comment did not receive a response.
The plaintiffs told SeafoodSource they expect the court will schedule a hearing in the next few months to choose a receiver for the company.
Photo courtesy of Sino Agro Foods
